This month we’ve seen more big real estate moves in play, and
see developers marching on with new projects that will continue to
change the skyline and living trends over the next few years. Yet,
the data continues to show the market is changing.

In the commercial real estate headlines...

It’s becoming harder and harder to deny or ignore the fact that
the US real estate market seems to have turned. Despite a strong
economy and still bullish stock market more data is showing up
across the country, suggesting we passed a new peak.

It seemed to start with declining rents in San Francisco,
followed by hitting Manhattan and The Hamptons. Now parts of
Florida are revealing foreclosures has been growing month over
month again. In some cases by as much as 59%.

US home sales fell for the fourth month in a row in July.
CNBC reports luxury homes sales in New York City continue
to drop in response to new tax laws and declining demand from
international buyers.

Still, Manhattan remains home to America’s
most expensive real estate. Prices can top $10,000 per square
foot. That’s more than double of any others, including frothy San
Francisco. However, Manhattan
inventory has hit an all time high as of May 2018, and has
grown at the fastest pace on record. This surge in residential
inventory has also subsequently caused the most
price cuts since 2010. 28% of Manhattan property listings
slashed prices in quarter two 2018. 21% of Brooklyn properties saw
a price cut last quarter.

The slowing market has even hit the former
home of Jordan Belfort the ‘Wolf of Wall Street’. After
failing to sell with one broker the property has been relisted with
a 15% price cut. The $510,000 in savings gives it a new price tag
of just $2.89M. Not bad for a Long Island home with 5 bedrooms, 8
bathrooms and over 8,000 square feet of living space.

While new construction may have been faring better than existing
properties, those sales fell by over 5% between May and June 2018
as well. The
National Association of Home Builders is also reporting
that builder sentiment dropped to its lowest point in a year in
August 2018. Buyer traffic is also down 2% according to the NAHB,
which could signal more weak sales data to come later in the
year.

SL Green has continued to liquidate commercial assets in New
York City. After an April deal to exit a Broadway property for
$633M,SL
Green has now agreed to sell its 48.9% stake in 3 Columbus
Circle for over $200M. The firm has said it aims to buy back its
own stock versus making more acquisitions.

Owners of a 21st floor super-unit in the Central Park
Trump Park building may soon seen their property hit the
auction block. The New York Post reports they are currently owe
over $99,000 in back taxes. That’s in addition to over $9,000 in
back taxes on a unit in the building they exclusively use as a gym,
and over $34,000 in past due association dues.

If you are in the mood to collect Trump branded real estate, a
unit right below the president’s in
Trump Tower just went on the market for a modest $25M. The
unit offers 6,000 square feet and five bedrooms. Of course, you
might have to jump through a lot of security checks and even
compete with the president himself to be the next owner.

If that’s not presidential enough for your tastes, then you can
always drop $39M on the mansion in the sky at
Trump World Tower. You’ll gain an extra bedroom, have over
$7,000 square feet, and most importantly, 360 degree views. It
already boasts some pretty fine finishes, though you might as well
drop a few more million to decorate to your own tastes.

If you’re just visiting the Big Apple, then it’s worth checking
out the
Empire State Building’s new Art Deco observatory entrance. It
won’t be fully complete until 2019, but the work is already looking
amazing. Efforts are being made to reduce wait times, though a new
VIP lounge could help you enjoy the journey more, if you are
willing to pay for it.

In other news, real estate professionals, builders, sellers and
lenders just got a big wake up call from HUD. The government is now
going after
Facebook for allowing advertisers to use its platform to target
real estate advertising towards different groups. This is
considered a breach of fair housing laws. If HUD or the CFPB seek
more data from Facebook to track down advertisers based on the
targeting options chosen when running campaigns, this could just be
the tip of the iceberg in lawsuits and mega fines for thousands of
businesses and independent professionals.

The next major target of a lawsuit should probably be
Zillow for the monopoly it is amassing. The online giant
recently bought a mortgage lending business, has begun flipping
houses itself, and aims to be the number one tenant screening and
application portal. All while shooting to take a slice of rental
payments to landlords.

In terms of real estate design and building trends, two big
factors have come to the forefront of planning. One is social
engagement. Social isolation has now been deemed as much of a
threat to health and life expectancy as obesity or smoking. The
other is using more healthy materials as designs to boost overall
wellness. From lighting to airflow to materials used from the
bedroom floor to the garage, there are a lot of improvements that
can be made to improve health. Expect 2019 to 2020 to be much more
about health and wellness in design, as being green and tech smart
become the expected norm.

For Brooklyn Real Estate News

The L train shutdown effect seems to be showing up in a big way
for Brooklyn renters and landlords.
National Real Estate Investor reports that Williamsburg
rental inventory has jumped by at least 25% over last year as
tenants rush to find pads with better commutes.
AM NY reports that while rents in Williamsburg are now
down an average of $250 per month as landlords scramble to fill
vacancies, and as much as $448 for some units, experts are warning
rent stabilized tenants to stay in place. It may be getting cheaper
for landlords to buy out rent stabilized tenants, and to boost the
value of their assets with market rate leases, but it could be hard
for movers to find such great deals elsewhere for the long term.
This might be a great time for these tenants to find online work
and cut out the commute altogether.

Brooklyn is making the new world of remote work even easier too.
Over 38% or 2 in 5 workers in NYC are now freelancers. In response
the city has sponsored a new
freelancing hub in Dumbo. The site will offer free workspace,
workshops and other training and consulting.

According to the Wall Street Journal, one Canadian commercial
real estate lender is betting big on the Brooklyn office market
too. One of Canada’s biggest lenders has pledged a loan of over
$200M for a new
downtown Brooklyn office building.

Other developers still seem overwhelmingly bullish on Brooklyn
too. The City Council just approved a
rezoning plan to allow a new 8 building project with over
1,100 apartments in The Broadway Triangle area of Williamsburg.

One Blue Slip, a part of
Greenpoint Landing just launched leasing for its 30 story
luxury tower. Studios start at $2,600 per month. 3 bedroom units
start at $7,950 per month.

In other boroughs

Despite some negative data already covered, sales prices are
actually being increased for the new supertall tower at
111 West 57th Street. New records show one two bedroom unit
previously listed at $7.5M will now be sold for $15.5M. Also
demonstrating the confidence builders have is a dispute with its
lead sales agent who is now suing for $30M.

The
Rikers Island shutdown is already in play and is expected
to result in the building of 4 new jails in the Bronx, Brooklyn,
Queens and Manhattan. This could change some neighborhood dynamics
in the process. Though it is still a little unclear whether it will
actually lower or increase the number of incarcerated in New York
City, the majority of whom are sitting in Rikers, waiting for
trials and not yet found guilty of anything.

A new 21 story
tech training center has the greenlight to go ahead in Union
Square with the aim of bringing new tech jobs to lower income
workers and strengthening the local workforce and economy.

Citi Habitats reports that the Manhattan rental vacancy
rate uncommonly rose to 1.34% this summer. That’s not much of a
increase to ease things for renters desperately seeking affordable
apartments, but is a stat landlords should keep watching.

Unfortunately, the Waldorf
hotel renovations are now expected to extend into next
year. On the brightside, now rooms are anticipated to be bigger
than many city studio apartments. SO, if you’re ever feeling
cramped but don’t have time to getaway, consider a staycation in
the city at the Waldorf. The smallest rooms will now start from 650
square feet according to BisNow.

In what could finally be a win for truly affordable housing in
New York City, a
new Crown Heights building has opened a lottery with units
starting at just $938 per month. Unfortunately, income requirements
demant tenants earn at least $32,000 to $62,000 per year, meaning
they might still have to pony up 50% of their income to get in.

Queens is about to see a new record setting commercial real
estate transaction. The Carlyle Group has agreed to pay $284M for a
45 story building in
Long Island City.

For Landlords and Investors

For landlords and real estate investors seeking to optimize
current debt leverage or expand portfolios capital still appears
more than plentiful. There are all types of lenders and funding
sources eager to finance real estate investors. Among them are many
nonbank lenders, who have increased their market share by 8% in
the past 4 years, seeing a 40% increase in originations, and
funding of at least $60B last year alone.

Sadly, Market Watch reports that while
mortgage rates have actually been heading down, negative
trending in the housing market are beginning to have their toll on
the wider economy. This is showing up in slow building activity,
few sales, low real estate commissions and jobs. This will likely
only worsen affordability as workers suffer lower incomes and more
unemployment, while property prices and rents remain relatively
high in comparison.

In conclusion...

It has been a busy year in New York real estate market already.
Big players, buyers, and developers haven’t been shy. In fact, we
continue to see a run of aggressive new projects coming onto the
market, some with even larger price tags.. Brooklyn continues to be
one of the biggest beneficiaries of this action, and is receiving
much of the investment capital. Rents have been blown around by a
variety of factors, though appear to be solidly marching on.
Housing inventory may be growing, though there are many economic
factors which could impact the direction of the market through the
end of the year.

Well, that’s it for this month’s
round up. Look out for our other upcoming reports, and check out
the latest data on the Manhattan and Brooklyn residential and
multi-family market, and which features and neighborhoods are
yielding the best rents at NewYorkMarketReports.com.

Make sure you like and share this
report, and leave your comments on this news, or any trends you
think we overlooked or you want to hear more about in the comments
section.

About the Podcast

From the Ratner Team, this is the Brooklyn Made Podcast, a show about Real Estate, Entrepreneurs, Businesses and the professionals behind one of the hottest real estate markets in the world.
The Brooklyn Made Show is a one-stop shop for anyone interested in New York real estate, Entrepreneurship & Business. On the show, you'll learn valuable insights from New York's industry leaders, stay up to date with real estate & business news, follow market trends, listen to exciting local stories and much more...
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